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Michigan Property Tax Errors Can Result in Overpayment

Randall P. Whately PLLC July 15, 2022

In March of each year, property owners in Michigan receive Notices of Assessment and Taxable Value. How does a homeowner know whether the proposed property tax for their residential property is correct? New legislation is advancing through the state legislature that would remove a three-year limit on repayment of tax overpayments if caused by an error.

One Michigan family discovered after many years that a county worker had imputed incorrect data and they were being charged property taxes at a higher rate as if their single-family home was a rental property. When they requested a refund, they learned of a three-year error limit law. That had paid more than necessary for seven years, but because of the law, they only received a refund of their overpayment for three. They lost thousands.

A bill to remove the three-year limit recently passed in the Michigan State Senate 35-0. Removing the limit would mean that a property owner who had overpaid for many years, because of a county error would receive a refund for the full period. The legislation still must pass the House of Representatives and then will go to the Governor for signature.

Homeowners should closely review assessment statements to ensure their property is classified correctly and the valuation appears reasonable.

Homestead Exemption

After buying a new home, it is important to review whether you qualify for a homestead exemption and file the proper forms with the county. In general, the following property is non-homestead:

  • A rental property

  • Second home or vacation property

  • A bank-owned foreclosure

If you buy a property that was used as a rental, it does not mean that the tax classification must remain non-homestead. Property status adjustments occur once a year on May 1. This means a property you buy on August 15 that is classified non-homestead will remain so until May 1 of the next year. Ensure that the county has correctly made the change or you may overpay on property taxes.

Appealing a Property Valuation

During the recent housing collapse, assessed values did not always reflect lower property values. To appeal a valuation there must be some evidence that the Assessor’s appraised value is incorrect. The Assessor reviews the size, age, lot size, types of construction and finished basements or attics when estimating property value.

If recent sales of neighboring properties are much lower that the assessed value, you may have grounds to appeal the valuation. Often a professional appraisal of your property can assist with an appeal.

If you have concerns that the county made an error or the assessed value of your home is inaccurate, contact a Michigan property tax appeals attorney. After a review of your individual assessment statement, a lawyer can advise on next steps.